Page 19 - Banking Finance May 2019 N

MUTUAL FUND

Mutual fund SIP collec- Mutual fund industry adds over 1 crore new folios in
tions up 38% in FY19 FY19
SIPs, have registered a 38 percent Mutual Fund Industry has added over 1.11 crore new folios in the financial year
on-year 2018-19, taking the total to an all-time high of 8.24
rise in col- crore at the end of March 2019. Although the ad-
lections to ditions were lower than the 1.6 crore investor ac-
Rs 92,693 counts in FY18 fiscal, it was higher than 67 lakh
crore, de- folios added in FY17 and 59 lakh in FY16.
spite the equity market being vola- Over the last few years, investor accounts have in-
tile. According to data provided by creased following robust contribution from retail
the Association of Mutual Funds in investors, especially from smaller towns and huge inflows in equity schemes.
India (AMFI), mutual funds collected Fund managers attributed the addition in equity fund folios to the matured
a total of Rs 67,190 crore through behaviour of retail investors who were seeing the market fall as an opportunity
SIPs in April-March FY18. to invest their surplus money. Folios are numbers designated for individual in-
The data reveals that the MF indus- vestor accounts, though one investor can have multiple accounts.
try has added 9.13 lakh SIP accounts
on average each month with aver- Mutual funds up exposure in NBFC portfolio assets
age SIP size at around Rs 3,070 per Mutual funds have recently increased purchases of securitized debt from non-
account. "We have seen an uptrend banking finance companies (NBFC), which now sell
in SIP numbers in each month. We fewer short-duration commercial papers to raise
have not seen any slowdown in the cash after asset-liability mismatches and IL&FS de-
opening of SIP accounts despite vola- faults last autumn curbed fund flows to the sector.
tile markets," said NS Venkatesh, Compared with November, mutual fund purchases
Chief Executive Officer, AMFI. of NBFC securitized loans climbed more than 65 per
At present, domestic mutual funds cent in February, with collective industry exposure
have about 2.62 crore SIP accounts to these instruments pegged at Rs 95,294 crore.
through which investors regularly in- Reliance Mutual Fund, Franklin Templeton, and ICICI Prudential are among as-
vest in Indian mutual fund schemes. set managers that are said to have increased their purchases of these papers,
The data by AMFI clearly shows that said three people with direct knowledge of the matter.
despite the markets being volatile, "PTCs held by asset management companies are originated largely by NBFCs
investors are not shunning SIPs. Ex- and microfinance institutions," said Bhushan Kedar, Director, Mutual Funds
perts said investors are becoming Research, CRISIL. "Underlying assets in such cases are vehicle loans, home loans,
more savvy and mature. construction equipment loans, microfinance loans and also rent receivables. The
SIPs are investment plans offered by maturity profile of such securities in most cases is up to three years." Three-
MFs wherein one can invest a fixed year PTCs typically provide higher yields, about 1.10 per cent to 1.6 per cent
amount in a scheme periodically at more than similar certificates issued by investment grade companies. The spread
is as high as 2.7 per cent for instruments maturing in seven years, CRISIL data
fixed intervals, say once a month, in-
showed. "The investment in PTCs by mutual funds has grown sharply in recent
stead of making a lump-sum invest-
ment. times and is an indication of the participation by mutual funds in securitized
assets," said Kedar.
In the current scenario, buying at low
prices and selling at higher prices Securitization hit a record of Rs 1.9 lakh crore in FY19, compared with Rs 85,000
crore in FY18. "Structured credit is an interesting and appealing product as it
works brilliantly because the volatil-
ity means you buy more units at a offers the opportunity to sell down and distribute products to several partici-
lesser price and hence, your ulti- pants in the market, such as mutual funds or family offices," said Ashok Wadhwa,
group chief executive officer (CEO) at Ambit Holdings. Of the total securitization
mate returns will be better.
in FY19, about 36 per cent are PTCs.

BANKING FINANCE | MAY | 2019 | 19